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Clause 1—(Rating Of Industrial And Freight-Transport Hereditaments)

Volume 639: debated on Wednesday 3 May 1961

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I beg to move, in page 1, line 12, at the end to insert:

Provided that this section shall not apply to shipbuilding yards, that is to say, any premises in which any ships are made, finished or repaired, and premises used primarily for the manufacture of marine main propelling machinery therefor. For the purposes of this section, "ships" shall not include any ship which is of a gross tonnage (ascertained in accordance with the Merchant Shipping Acts 1894 to 1958), of less than eighty tons.
The object of the Amendment is very straightforward, but the aim is to exempt industrial hereditaments in the shipbuilding industry from the abolition of the present 50 per cent. derating which is due to come into effect in about 1963. The exemption would be statutory and there would be no Ministerial discretion. I should like to draw the attention of my right hon. Friend the Minister of Housing and Local Government to the fact that there is a certain degree of rigidity in the Bill which allows no discretion or variation in these matters and which withdraws concessions which have by common usage come to be of considerable value to certain industries such as shipbuilding which from time to time pass through periods of depression, distress or difficulty.

My right hon. Friend must know that over recent months there have been repeated exhortations by the Government about the need to export. The point has also been made repeatedly by Ministers that the shipping and shipbuilding industries need to do more to help themselves. Many of these exhortations are very little more than that, for in the case of the shipbuilding industry—and I am glad that my hon. Friend the Member for Tynemouth (Dame Irene Ward) is here to sustain me in this matter—large improvements have been and are being made. When we compare our shipbuilding industry with those abroad we must realise that there is often a penalty for success. The penalty for our success in winning the war has placed our competitors abroad at a tremendous advantage in that in Germany and Japan yards were able to be repaired, rebuilt and sustained out of funds coming largely from North America. Our shipbuilding yards, in order to survive at all, had to develop old property in difficult circumstances in an era when competition was increasing and when the funds available for development were small because of the high-tax economy in which we live.

This has brought us to the present position in which, in general, I think that British shipbuilding is reasonably competitive with the industry abroad. There are difficulties of credit facilities, to which no doubt my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) will be paying attention before, during and after the debate. But these is also a particular point in relation to the Bill. The shipping industry is passing through a period, which might well be prolonged, of difficulty because of the intense competition which it meets from abroad. There are difficulties over subsidies, over support of one sort or another and over credit facilities. The revaluation of their property will often be at an enhanced value as a result of the improvement which has been made not only in self-defence and in the search for efficiency but at the exhortation of the Government. This is the moment—this moment of difficulty—which is chosen to end derating, which is one of the main supports and sources of sustenance of the shipping industry. On the one hand, the Government are exhorting industry to be efficient, to cut its costs to the bone and to become as competitive as possible. Yet with another hand the Government, through another Ministry, are slapping on costs as an addition to the basic costs of industrial undertakings.

Hon. Members say that help should be given to the shipbuilding industry. What does it profit to help an industry if at the same time we are removing advantages which it enjoys? It seems to me that the most immediate help which the Government could give to the shipbuilding industry, which is likely to face a very long period of difficulty and depression, is to concede the principle of the Amendment.

May I give one or two small examples of how the ending of derating will affect shipyards? I do not think that the Committee expects me to name the firm which I have in mind, but I have here a letter from which I will read limited extracts. It is from a shipbuilder who has spent a considerable amount of money in recent years in developing his yard. He writes:
"Prior to 1958 the total amount which this firm paid in local rates had a negligible effect on the price of a ship. Following the modernisation of the yard we had a revaluation at a net annual value of £31,000. At present this gives us a rateable value of £15,500 approximately, as 50 per cent. derating applies. In other words, we pay about £14,000 per annum in rates. If one calculates at the rate of four ships a year from this yard, it amounts to £3,500 per ship, which in itself is quite sufficient to cause the losing of an order in the highly competitive situation in which we find ourselves today."
That is the situation before revaluation. Clearly this figure could severely affect the position of the shipbuilding yards. The letter continues:
"In the event of the 50 per cent. derating being discontinued, the amount of rates we would have to pay would be very substantially increased, which would again reduce our ability to compete with Continental yards."
This is the moment at which the Government, with one Ministry exhorting shipbuilding to become more efficient, decide to impose, through another Minister, added costs which cannot be passed on to the customer. The consequence of the ending of derating can only be to increase the likelihood of a failure to gain orders abroad or even at home, to increase the chance of unemployment and to add a burden to shipbuilding at a time when it is the least able to bear it.

I could quote further examples of how the ending of derating will hurt and perhaps kill some shipyards, but no doubt my right hon. Friend has seen the statement by the Shipbuilding Conference which was printed in The Times yesterday. One passage of the statement reads:
"One firm on the Clyde, after having spent millions on modernisation now faces an increase in rates from £9,000 now to £100,000 in 1963."
That is not solely due to derating; it is the combined effect of revaluation and the ending of derating.

I urge my right hon. Friend to consider this matter most seriously, as no doubt he has done. I regret that a later Amendment which I put down, which was wider than this Amendment, will not be called. It sought to give discretionary power to the Minister to derate depressed industries. I should like to urge that course on the Minister.

We are, however, restricted to this Amendment, and I urge him to realise that there is a contradiction in Government policy. The Prime Minister and the Minister of Transport have urged greater efficiency and the reduction of costs on the shipbuilding industry. No doubt the new Minister charged with the responsibility for shipping and shipbuilding will also urge this, and perhaps Government help will be given to shipbuilding in due course. At a time when the Government are doing this, it is surely nonsensical, and economic folly and madness, to be heaping on costs which cannot be passed on to the consumer. All that will happen is that the consumer will drift away through the fog over the horizon.

I urge my right hon. Friend seriously to consider accepting the Amendment, which may well be the sole sharp and quick way of helping British shipbuilding to survive the immediate problem which it faces.

I should like to associate myself with everything which was said by the hon. Member for Sunderland, South (Mr. P. Williams). That of itself is a remarkable thing for me to do, but I agree so wholeheartedly with what he said on this occasion that I do not apologise, as a Scottish Member, for speaking on an English and Welsh Bill. Perhaps we Scottish Members do not do it often enough. I pay rates in both England and Scotland and have some entitlement to speak. Whatever is done in the Bill will be reflected in the rating and valuation position in Scotland. The hon. Member for Sunderland, South was good enough to quote an example from the Clyde, and I therefore do not feel out of tune with the Committee in speaking to the Amendment.

I imagine that the first argument which will be advanced against the Amendment is that no one ought to have an exemption. The argument will be that if there is any need to help an industry it ought to be given by some other means and there ought to be equity in treatment of rating and valuation for every industry in the country. No doubt that is an argument which the Minister will use. I retort by saying that we do not do this with agriculture. This principle of equity is not applied to agricultural hereditaments. The argument therefore cannot be advanced on the principle that we apply the same valuation to everybody and that we must help industries in some other way than through rating. This argument is breached immediately by the Government's own admission that we must treat a certain industry differently for rating and valuation.

7.30 p.m.

The reason that consideration was originally given to industry as a whole was the pre-war slump. The plea which has been made today by the shipbuilding industry, which I do not regard as a special pleading for favours in order to make large profits, is that the industry is facing a very difficult situation which is not of its own making and that it needs Government help. That help is not forthcoming. Admittedly, a Shipbuilding Advisory Committee has been set up, which has made some recommendations to put before the Chancellor, and no doubt the Cabinet will come to some conclusion about them some day. The point is that it must be very soon.

I understand that this Bill will apply—and this is what will happen if the hon. Gentleman's Amendment is not accepted—in 1963. These will be the years of crisis for this industry. Hon. Members need not take my word for that. If they read the Advisory Committee's Report, they will find the precise details of the estimated target for the industry and what can reasonably be expected in the future. This is a Government Committee, not a committee acting on behalf of the industry—not an industrial, vested interest committee.

The Report says that the industry is now producing 1·4 million tons a year, but in the critical years from 1965 to 1970, the figure will fall to an average of ·9 million tons. It shows further, and this is why I think it is important for a Scottish voice to be heard here, that this will be particularly bad in Scotland and Northern Ireland. I therefore come to the rescue of English hon. Members, following the Biblical principle which the Scots have often taught, that one should always cast one's bread upon the waters, particularly when the tide is coming in. I cast my bread on an English Bill in the hope that it may bring later, on the tide, a Scottish Bill.

This matter is agitating many shipbuilders in Scotland, and they are already asking the Secretary of State for Scotland to give consideration to it. This industry is in this difficult position now, not in ten years' time, and that, I think, is the force of the argument. The Minister might reasonably say that he was quite willing to accept this as a temporary expedient, and as part of the Government assistance, in order to get over this difficult time. He may well say that he is willing to concede this Amendment at this juncture, but that, when the shipbuilding situation has cleared up, he will bring in an amending Bill; in other words, that he is not willing to make the concession permanent. One should admit that that would be a perfectly fair answer, but something has to be done, and the only alternative that I can see is that the Minister will tell us something which we thought we should hear on Monday, and expect to hear very soon. It is that the Government now have a plan for the shipbuilding industry and that they have adopted various suggestions in the Departmental Committee's Report to such a degree that this kind of exemption from derating is now unnecessary.

I cannot see any other way of arguing that, and I look forward to hearing the usually agile Minister of Housing and Local Government giving us the answers to these questions. He is not, strictly speaking, in the local government field tonight, because he is intervening in the industrial future of a very great industry, a very proud industry, which has done a very great deal for this country. Apart from the views of those hon. Members who represent shipbuilding constituencies, there are many hon. Members who are proud of the achievements of the shipbuilding industry. This country cannot afford to harm this industry.

This is not a dying industry but an industry in a crisis, and it is up to this Committee to try its best to help it. That is why I hope that the Minister will look upon this Amendment favourably, and not as special pleading for vested interests, with hon. Members arguing with the reflexes of Pavlov's dog. We are genuinely arguing a national cause.

I want to add a few words to what my hon. Friend the Member for Sunderland, South (Mr. Paul Williams) has said. I do not think that there is the slightest doubt that the shipbuilding industry has a very difficult time ahead. The tramp section, the coastal section and the tanker section of the shipping industry are extremely depressed, and, from all I know of it, I do not think the liner section is a great deal better. Thinking only in terms of orders which may come from British shipowners, the outlook for the shipbuilder is extremely black.

I appreciate, of course, as I think every hon. Member of the Committee appreciates, the great difficulty of giving exceptional treatment to one industry. It may be not too difficult to find other industries, though perhaps not of equal importance to the shipbuilding industry, which are equally depressed or have an equally depressing outlook, and it may make a hole in the purpose of the Bill we are considering if exceptional treatment is meted out to shipbuilders. There is another fear, which I think is relevant to the Amendment before the Committee, which I should like to express, particularly as my hon. Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) is now sitting in his newly-won position on the Front Bench, and I add my congratulations to him on his new office.

It is that, in an effort to help the British shipbuilder, and perhaps even the British shipowner, the Government may be persuaded that it would be a good thing to help British owners to scrap existing vessels and to build new ones. I very much hope that the Government will not proceed in accordance with that suggestion. If that process were to be continued—and it has been in operation in the past—the logical conclusion would be to scrap all British merchant ships for the common benefit of the shipowners of all nations other than British owners.

The original suggestion made some years ago was to scrap two and to build one. It is nearly as bad to scrap one and to build one, but it is much better to scrap one and to build twenty, or, indeed, to scrap none at all. I appreciate the difficulty of the Government in regard to accepting this Amendment, but the situation in which the shipbuilding industry is now is, in my view, so difficult that it deserves careful consideration by the Government.

I cannot claim to speak with a constituency interest in this matter, but I believe, as one interested in the shipbuilding industry, that there is a danger that the provisions of this Bill will fall particularly harshly upon it. For that reason, I ask my right hon. Friend to give special consideration to the Amendment.

We all know that the industry is going through a very difficult time. There was a time when I wore out a good deal of shoe leather going round the various shipbuilding yards of the United Kingdom, including Scotland. My chief recollection of those visits relates to how much shoe leather I did wear out, what a long way round it was and how large, of necessity, these establishments are. I am not aware of the exact way in which rates will be fixed, but I imagine that the size of the yards will cause them to attract a very much higher share of rates than would otherwise be the case. Indeed, although these yards are large, they have a disadvantage which many of our foreign competitors have not, in that they were laid down many years ago. There is now only one major yard which has been laid down since the First World War, whereas our competitors in Japan and Germany have been able to rebuild their yards from scratch, on the basis of a much more economic use of land. Consequently, the very old-fashioned layout of these yards will, at the same time, attract a higher amount of rates to them.

There is the further point that in modern methods of construction and prefabrication, it has been found necessary to abandon a number of the old slipways, and not use all of them. Here again, rates will be attracted to certain yards which are not now fully economic or fully in use. I hope that my right hon. Friend wil realise this difficultyl. It is difficult to make special pleading for any particular industry, because, as the hon. Member for Greenock (Dr. Dickson Mabon) pointed out, the order books are getting low, and these additional rates will come into effect in 1963, the very year in which the orders on the books will be running out. I hope that my right hon. Friend will bear in mind these considerations of general national policy when addressing himself to the Amendment.

I wish to add my support to this Amendment which has been so fully and ably moved by my hon. Friend the Member for Sunderland, South (Mr. P. Williams). I do not want to go over the various points he made, but I shall follow a line of my own. I think it most unfortunate that we should be discussing this Rating and Valuation Bill without having had a proper and full discussion of the plight of the British shipbuilding and ship-repairing industry.

We are always looking at problems out of their general plan and context. As has been admirably said by some of my hon. Friends and by the hon. Member for Greenock (Dr. Dickson Mabon), it is very difficult for the Minister of Housing and Local Government to have to deal with this problem when we have not discussed the whole issue. Except for the North Atlantic Shipping Bill, we have not heard of the proposals the Government have in mind to deal with the problems of shipbuilding and ship-repairing.

Various comments have been made by people connected with the shipbuilding industry, and I want to add one more. The more we build up the case, even if we cannot get any promise from my right hon. Friend, the better it should be. I add my congratulations to my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) on his new appointment. I hope he will be able to put forward to the various departments concerned the anxieties felt by those of us representing areas connected with shipbuilding and ship-repairing.

I want to express myself forcefully. It is most unfortunate that we should have to deal with this matter only a weekend and a couple of days since my hon. and gallant Friend was appointed. I should have felt much happier if he had had more time in his office. I have great faith in him and take much pleasure in thinking of him arguing with the Minister of Transport. I think I know who would come out on top. It is regrettable that he has so recently come to the Department that he has not had time to see the various Ministers. I wonder whether he has been able even to have a discussion with my right hon. Friend on this important Amendment.

I want to add this comment from an important firm on the Tyne about its difficulty in obtaining new shipbuilding orders. It is the well known firm of John Readhead & Sons. The chairman and managing director has stated that his firm has been eliminating all profit from its tenders for ships in an effort to get jobs for employees. The chairman and managing director, Mr. Harold Towers, said:
"In fact, we have been quoting below out-cost."
He said that after the launch from the yard of the 12,800 tons deadweight cargo liner "Gorjistan" for the Strick Line, London. He went on to say:
"We have been trying desperately to find new work for delivery in 1962 and 1963. So far, with the exception of one ship, we have been unsuccessful and indeed unfortunate. Continuity of employment, we know, is vital and for this reason alone, and particularly when we have so many loyal employees, we will go on with our earnest endeavours to secure more work."
That reinforces the point made by my hon. Friend the Member for Sunderland, South, that during the period in which shipbuilding yards have been fully employed they have had the benefit of derating. Just when they are going into a very difficult period they have to face this new proposal.

7.45 p.m.

I am not blaming my right hon. Friend the Minister of Housing and Local Government. He has to look at the whole proposition from the point of view of rating and valuation. My complaint against the Government is that there are so many Ministers concerned with the problems of shipbuilding, ship-repairing and shipping that we never get a coordinated policy. We move from one situation to another and there are relatively few hon. Members who have these interests in mind or who can speak for these interests. We argue and talk and have reports about these problems. I wonder whether all the reports which have been issued are to be of any use if we do not have a statement on policy before we part with this Bill. It is deplorable that Her Majesty's Government should allow this great industry to be confronted with the implications of this Bill without our having had an opportunity of discussing the situation the industry faces.

The Minister of Transport has had many reports. He flits from flower to flower, or twig to twig, but we can never pin him down. For a very long time we have been asking for someone to be appointed to deal with these problems because we felt that the Minister of Transport was over-loaded. Then, much to our pleasure, we had the appointment of my hon. and gallant Friend. I think he ought to have been appointed a Minister of State. Then he would have been in a senior position. He has not had time to discuss the details and implications of this Bill. I doubt whether he has had an opportunity of discussing problems of shipbuilders with the Shipbuilding Employers' Federation, the Shipbuilding Conference, the trade unions and the industry. He may have had a word in the privacy of the Ministerial room with my right hon. Friend, but he has not had an opportunity of getting the problem put before the Cabinet. This is a Cabinet problem, because it is all part of the great difficulty in which the industry finds itself.

I am not going into the detail, which has been dealt with admirably already. I wish to put on record that I do not think this industry should have to meet increased costs in an area when we are entering into the greatest competition the country has known for many years. I do not know what the Minister of Housing and Local Government can suggest. As the hon. Member for Greenock said, this Bill does not apply to agriculture. But, of course, we all know that there are far too many hon. Members representing agricultural interests in this House.

I have great faith in Conservative Members when they know the problems involved. My hon. Friend the Member for Dorset, West (Mr. Wingfield Digby) represents an agricultural area and in his Ministerial capacity learned something about shipbuilding and repairing. Therefore, when he comes to our support we have added force to the case we are putting to my right hon. Friend the Minister of Housing and Local Government. Government action depends on how many supporters there are for a case. I believe it is because nothing has been done about agriculture in this Bill that this blow has been aimed at shipbuilding and repairing.

I say nothing more about that matter, and I expect that everybody will be extremely relieved. I hope that by tomorrow, when we ask my right hon. Friend the Leader of the House for a debate on shipbuilding and repairing—which would also bring into line the problem of this aspect of the industry—my hon. Friend the new Joint Parliamentary Secretary to the Ministry of Transport will have had a chance of seeing the Leader of the House and explaining to him how we feel about this matter, so that we can then get on with trying to look at this industry in a wide picture and not just through one small aspect which it is difficult to know how to deal with.

Hon. Members have been commendably brief in their remarks, and I will follow their example. There is not much that I can add to the admirable speech with which my hon. Friend the Member for Sunderland, South (Mr. P. Williams) moved his Amendment. On the other hand, it is right that somebody should speak for Merseyside—the Cheshire side. The other day I wrote to my right hon. Friend the Minister of Housing and Local Government, enclosing a letter from the head of our great shipyard which has built some of the finest British ships. It is true, as other hon. Members have said, that this industry is going through a difficult time for a variety of reasons, one of them being the competition from abroad which is artifically subsidised, as we heard in last Monday's debate.

While it may be true that there may be other ways in which, to some extent, this great industry can be helped, and that there are ways in which it can and should help itself, we should not, in this time of great difficulty, needlessly make things more complicated and difficult for it. At a time when it must face the new valuations and the re-rating of industry, it is at the receiving end of a serious double-barrelled shot.

I fully recognise my right hon Friend's difficulties. I hope that he will feel able to look very closely at what is an extremely grave problem, and will, if he can, in consultation with the new Joint Parliamentary Secretary to the Ministry of Transport—whose appointment I also welcome wholeheartedly—try to do something to alleviate the quite serious blow in this Bill at one of our greatest industries.

I will be very brief. I have the greatest sympathy with what has been said by my hon. Friends, particularly as I have a large shipbuilding yard in my constituency, which is going through precisely the same difficulties as the yards in their constituencies.

Nevertheless, I do not think that the method proposed in this Amendment is the way in which the industry should be helped. I have two main reasons for that view. First, we are trying to bring all rateable values on to a current basis, and if we made an exception of the shipbuilding industry it would mean that domestic ratepayers in these areas would bear a higher share of the rate burden than ratepayers in other areas. That would not be right. It would mean that the industry would be subsidised by ratepayers in certain areas.

Let us be clear about the use of words. The removal of a financial burden cannot possibly be interpreted as a subsidy.

In this case, it can, because it would mean that domestic ratepayers in shipbuilding areas would be paying more rates than they would have been had things been left as they are now in the Bill.

My second reason may take away some of the fears of my hon. Friend the Member for Sunderland, South (Mr. P. Williams). When this Bill becomes law, I do not think that it will mean that industry will pay more in rates than it is paying now, because the increase in the assessments on domestic properties is likely to be trebled, the increase on commercial properties will be 25 per cent. or more, and the increase on assessments for industry will be doubled. That means—according to calculations I and several other people have made—that, because of the different weighting of these different types of rateable properties, it is more likely than not that the rates actually payable by industry will remain the same.

I do not think, therefore, that the shipbuilding industry is correct in expecting that it will have to pay more rates. It is true that its assessments will go up, but the total rates that it will pay will probably remain approximately the same as now.

The Parliamentary Secretary to the Ministry of Housing and Local Government
(Sir Keith Joseph)

My hon. Friend the Member for Sunderland, South (Mr. P. Williams) moved his Amendment in a vigorous and eloquent speech, in which he told us something of the background of the problems of the shipbuilding industry. It has been followed by a series of pungent, short and effective speeches from a number of my hon. Friends, and from the hon. Member for Greenock (Dr. Dickson Mabon), who already knows that this Bill does not deal with Scotland so that I cannot go into detail about the position on the Clyde.

All my hon. Friends recognised, by the presence of my hon. Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett), the new Joint Parliamentary Secretary to the Ministry of Transport, that the special interest of this industry in rating is by no means under-estimated. My hon. Friend the Member for Tynemouth (Dame Irene Ward) said that he could not have had much time yet in which to master the problems of the industry. I can assure her that he has had plenty of time to talk to my right hon. Friend the Minister of Housing and Local Government and to me about this industry's rating problems.

I shall first deal with the Amendment in its technical form. I can thus clear it out of the way and then get on with the substance of the case. Technically, the Amendment is faulty because it does not remove the repeal by the Fifth Schedule of this Bill of Section 68 of the 1929 Act, which caused the derating of industry. The proviso, therefore, even if the Amendment were passed, would have no effect. Of course, if the Amendment were accepted it could be accepted in principle and revised in detail.

The purpose of the Amendment is that the shipbuilding industry should benefit by derating by 50 per cent. in 1963 and after.

8.0 p.m.

The speeches made upon the Amendment have been based on a view of what the Bill is doing which I hope to be able to persuade all hon. Members is a misapprehension. All those who have spoken, except for my hon. Friend the Member for the Isle of Wight (Mr. Woodnutt), spoke of the shipbuilding industry—and, indeed, all industry—as being likely to suffer a serious increase in rate burden as a result of the Bill. I must try to explain to them that this is not so. Until we know much more about the shift of the rate burden between the different classes of ratepayer we cannot tell what the general result of the Bill will be in detail, but we can tell something about the substance.

At the moment, the domestic ratepayer, who contributes about 48 per cent. of the total rates paid, is valued upon a 1939 basis. By previous legislation, he will be valued at current value after 1963, but because the impact of a change of valuation of 24 years—from 1939 to 1963—might otherwise be unduly hard on him, the Bill contains certain alleviating measures, especially a power in my right hon. Friend to derate domestic rates between 1963 and 1968. So much for the domestic ratepayer. For him there will be a 24-year jump in valuation, mitigated only by the derating power in the hands of my right hon. Friend. He bears 48 per cent. of the rate burden at the moment.

A further 41 per cent. of that burden is borne by commercial and other ratepayers—in respect of shops, offices, hotels, etc.—who are assessed on 1956 values and who, in 1963, will fall to be assessed on 1963 values. They will, therefore, suffer a jump in valuation of seven years, as compared with the jump of 24 years in respect of domestic householders. But under the 1957 Act the commercial ratepayers get the benefit of a 20 per cent. derating, which, also under that Act, ends in 1963.

I now come to the last broad class of ratepayer, namely, industry, which at the moment bears 11 per cent. of the rate burden, valued on 1956 values—which will jump to 1963 values in 1963—and which receives the benefit of a 50 per cent. derating, that benefit being ended by Clause 1, which the Amendment seeks to alter.

It is only when one has combined all the separate threads that one can possibly begin to estimate what will be the Bill's result in 1963 in respect of any class of ratepayer. In his Second Reading speech my right hon. Friend sought to estimate what the results would be. At that time he estimated that if industry were not rerated the result of all the other factors would be that industry's share of the rate burden in 1963 would be halved, because of the rise in valuation of domestic, commercial and other properties, whose share of the rate burden is 89 per cent. as compared with only 11 per cent. for industry. But after taking into account the rerating of industry, that is, the removal of the 50 per cent. derating the broad result would be that industry would continue to bear, after 1963, about the same share of the rate burden as it does at present.

There are a number of unknown factors that make this estimate a very rough one. One is the extent to which the values of industrial property have altered since 1956. But there will have to be some very sharp increases in the rateable values of the yards—and this at a time when everybody knows that shipbuilders are taking a gloomy view of their prospects—to justify anything like the pessimistic forecasts of the effect of revaluation.

My right hon. Friend is advised that if it is established that there is a recession in the shipbuilding industry, or in any part of it, such as to affect the amount which may reasonably be expected to be secured for the hereditaments which it occupies, that is taken into account in the valuation of those hereditaments. There are other unknown factors, such as the movement in the rental values of other classes of property, and the extent to which houses are to be derated.

Despite these unknowns, it is difficult to conceive of circumstances in which shipbuilders' rates will increase as much as they fear. A number of my hon. Friends have referred to the penalty—as they regard it—of increased rates on improvements carried out by shipyards. It is true that to the extent that plant of shipyards is rateable—and by no means all such plant is rateable—the rateable value will rise, but that is the whole basis of our rating system, and there is a compensating offset, because my right hon. Friend is advised that if, through the improvement of their equipment, smaller slipways and dry docks become redundant, the shipyard as a whole may be given, on that account, and for that part of its equipment, smaller or even nil values. All this has to be taken into account.

I repeat that the main purpose of the Bill, as my hon. Friend the Member for the Isle of Wight has explained and other hon. Members have acknowledged, is to return to the principle of basing rates on full current values, mitigated only by the derating power to ease the impact on the householder. No one likes paying rates, but it is being a little illogical to represent them, as several of my hon. Friends have, as being the last straw on the back of the shipyards. Shipbuilders have to make use of all sorts of materials and services, and I do not expect that they receive those services and materials free, or even at cut rates, just because they are temporarily in distress. Why, therefore, should they expect to receive local government services at cut rates?

What my hon. Friend the Member for the Isle of Wight said is true; if industry, including the shipyards, is not rerated in 1963, the burden on householders and commerce will be to that extent increased. If, instead of industry as a whole, only the shipbuilding yards are allowed to preserve their present derating, the rest of industry will share with householders and commerce the co-relative increase in the rate burden. Hon. Members should bear in mind the fact that whereas, on the whole, industry and commerce set their rates off against tax, the householder, who bears by far the highest share of any class of ratepayers, has to pay his rates out of taxed income. It is not for me to say whether the shipbuilding industry should seek help from the Government, but I must assert that the view of my right hon. Friend and the Government is that rate relief is not a desirable way in which an industry in distress should be helped.

I am also confident that when 1963 comes the gloomy forecasts of a much increased share of the rate burden falling either on industry as a whole or on the shipbuilding industry in particular will be disproved. My right hon. Friend accepts that any increase in rates is unwelcome, but he regrets that he can recommend the Committee neither to abandon the rerating of industry nor to discriminate, for rating purposes, between one industry and another.

I do not wish to detain the Committee for more than a moment, in order to add a footnote to certain observations that have just been addressed to the Committee by the Parliamentary Secretary. He said quite logically—and having been a member of the Standing Committee I understand the position—that, even when the 100 per cent. liability for rates was attached to the industries concerned, in the final analysis, when all the arithmetic had been done in the town hall and elsewhere, they may find that they would not have to pay in rates a sum very different from that which they were paying before the change was made.

If that be true, the corollary to that revelation, if I may so call it, is that if the addition of a 50 per cent. rate liability will not mean a greater cash liability to industry, obviously the small owner-occupiers of domestic hereditaments will be faced with an increased rate to compensate for the 50 per cent. which has not been collected from industry.

I am not making these remarks with the intention of being hostile to the claims which have been made by hon. Members on both sides on behalf of an industry which is in a special difficulty, but I share the view expressed by the Parliamentary Secretary, that, if there is to be some special relief, this is not the way to give it because it can be given only by placing on domestic householders—and particularly on the owner-occupier who has bought his house with the help of a mortgage—an increased rate liability of 200 per cent. or 300 per cent. This increase could not be cushioned by the special powers which the Minister is taking to himself.

These powers have nothing to do with the merits of the case. This cushion which the Minister is seeking to include in the Bill is not being provided for the economic reasons which have been stated. It is purely a political cushion to enable the Government to get over the next election, because, when the full impact of revaluation on the 1963 basis is realised by the ordinary householders, there will be such an outcry that even this Government will not be able to stand it.

I have no desire to be called to order by the Chair. I trust, Sir Samuel, that you will be tolerant. I was perhaps straying from the path of virtue, and hon. Members know that I would not wilfully do that. Nevertheless, these are cogent considerations. If I am to be asked to pass judgment and perhaps to vote on a proposition which gives a special concession to a particular industry, I want to know who will pay for that concession. Surely it is cogent to point out that if this concession is given it will have to be paid for by the domestic householder, the shopkeeper, and people on small fixed incomes.

The hon. Gentleman has raised an important point. May I pose a question about the domestic householder? If families were unemployed because there were no shipyards to employ them, their position would be worse than if we gave the concession to the shipyards and kept them in employment.

I am grateful to the hon. Lady for her intervention. All those who think responsibly about the duty they have undertaken are concerned to ensure that nothing they do artificially creates unemployment or makes industry less able to compete in the markets of the world, but it has been admitted by leading spokesmen of the Government that industrial derating can no longer be justified and that many of the big industries have had the advantage of a 50 per cent. rate relief for too long. After the war there were periods when the shipbuilding industry became active and revved itself up and did a tremendous amount of work which we all admired. At that time the industry received concessions in rates which it did not need. It is only since the industry has run into more difficult times that these arguments have been put forward.

Subject to the reservations I have made, I agree with the Parliamentary Secretary. If this special relief is to be given to the shipbuilding industry, it must not be at the expense of the domestic householder and the occupier of other premises. The people in Sunderland, Newcastle and Merseyside must not be penalised to help the shipbuilding industry. That would not be right. Subject to that, I have a good deal of good will for the purpose behind the Amendment, but this is not the way to do it.

8.15 p.m.

I will not detain the Committee much longer. I believe that we have received just about the answer we expected. My hon. Friend the Member for Tynemouth (Dame Irene Ward) put her finger on one of the most important problems in relation to the shipbuilding industry. Over the years the Government have always faced the problem piecemeal. Technocratic answers which may be logical and correct on the Bill, and which may be satisfactory in one sense, leave us with the running sore of the problem in the shipbuilding industry.

My hon. Friend said that derating was no longer the appropriate way to deal with this. It would be more satisfactory if the Government could tell us what is the suitable method of dealing with this problem. One is fobbed off with piecemeal legislation such as the Bill we are considering. This type of legislation permanently harms the shipbuilding industry and does nothing to remedy its problems.

The Minister said that the effect of revaluation on the domestic rate was unknown. How, then, can he say with confidence that this will not be the sort of thing which will savage the shipbuilding industry in 1963? If revaluation adds no burden, surely the ending of derating adds a burden? This must add to the sum total of rates paid by the yards.

This piecemeal facing of the problem of the shipbuilding industry leaves me, and I think most of my hon. Friends who are interested in the Amendment, profoundly disturbed about the future. We are not happy about the Government's approach, and because of that I cannot withdraw the Amendment.

Amendment negatived.

Clause ordered to stand part of the Bill.